Donald Trump and his allies have been accused of executing a “pattern of lawfare” akin to those exerted by authoritarian regimes in Hungary and Russia after adopting a new strategy to target political opponents: allegations of mortgage fraud.
First it was Letitia James, the New York attorney general, then it was Adam Schiff, a California senator. Now, the president is targeting Federal Reserve governor Lisa Cook, demanding she resign and threatening to fire her.
Cook, the first Black woman to be appointed a Fed governor, was appointed in 2022 by Joe Biden. Her 14-year term is not due to expire until 2038.
Leading this new strategy is Bill Pulte, heir to a home construction company fortune, appointed by Trump to lead the Federal Housing Finance Agency, which oversees regulations of federal housing lenders Fannie Mae and Freddie Mac.
Pulte has used his role to publicly accuse Trump’s opponents, publishing extraordinary allegations on social media and referring them for investigation.
He alleges that James, Schiff and Cook committed what is known as owner-occupancy fraud, when a person claims a second home or investment property is actually a primary residence to get better mortgages. Lenders are more inclined to give borrowers a lower mortgage on a primary residence, compared with a second home or investment property.
In a letter to the Department of Justice, Pulte claimed that Cook “falsified bank documents and property records to acquire more favorable loan terms”. In other online posts and on TV news appearances, Pulte said that Cook should resign or be fired over the allegations, which have not been verified.
James and Schiff have denied the allegations. Cook has pledged to “provide the facts” after gathering the relevant information.
Trump allies have celebrated the accusations, citing it as evidence of corruption within the Democratic party. “This is not just hypocrisy, this is poetic justice,” said Fox conservative commentator Laura Ingraham, of Schiff’s fraud accusations, in a clip Trump reposted to social media.
While Pulte has targeted two prominent Democrats and a Democratic appointee, accusations of such fraud are not exclusive to the party: an investigation by the Associated Press found Texas attorney general Ken Paxton, a Republican and staunch Trump ally, and his then wife claimed that three homes were their primary residences.
Ken Paxton speaks during a news conference in Washington DC on 26 April 2022. Photograph: Elizabeth Frantz/Reuters
Though Paxton has not commented on his own mortgage fraud accusations, he had said of the accusations against attorney general James: “I hope that if she’s done something wrong, I hope that she’s held accountable.”
Owner-occupancy fraud is not uncommon. Philadelphia Fed researchers in 2023 estimated that over 20,000 loans were given to “fraudulent investors”, or people who purchased more than one home they listed as a primary residence within a year.
Some political experts have raised concerns that the president and his allies are blatantly using the legal system to intimidate political opponents. “The fact that the law is being selectively applied underlines that this is part of a pattern of lawfare,” Don Moynihan, a professor of public policy at the University of Michigan, told the Guardian via email.
“What we are seeing is the type of weaponization we associate with authoritarian regimes, like Hungary, Turkey or Russia,” Moynihan added. “I would say that this is a massive warning sign, but the reality is that we have seen so many of these signs at this point.”
Contacted for comment, a US federal housing spokesperson said: “We refer people of all political parties for mortgage fraud, and we will continue to do so.”
A White House official said: “Anyone who engages in criminal activity should be held accountable. No one is above the law.”
‘No intention of being bullied’
That Trump is targeting a Fed governor speaks to the president’s continued antagonism against the Federal Reserve. Compared with James or Schiff, both of whom have headed investigations against Trump, Cook has not singled herself out as an enemy to the president.
But her role on the 12-person Fed governing board that sets interest rates has probably made her a target. Since taking office in January, Trump has demanded the central bank cut rates, disregarding the precedent set by his predecessors; the Fed has historically been treated as an independent institution, free from political influence, by past presidents.
The Fed board hasn’t yet lowered rates during any of the five meetings it had this year, which has infuriated Trump. Policymakers, including the central bank’s chair, Jerome Powell, say the administration’s tariffs have clouded the economic outlook and raises the risk of higher inflation.
Pulte has pushed himself into the heart of the action, criticizing the Fed on social media and reportedly even drafting a letter for Trump – which remains unsent – to fire Powell. “Jerome Powell’s career is done,” Pulte wrote in July.
Adam Schiff and Letitia James. Photograph: Getty Images and Julius Constantine Motal
“Could somebody please inform Jerome ‘Too Late’ Powell that he is hurting the housing industry very badly? People can’t get a mortgage because of him,” Trump wrote on social media earlier this week.
Trump’s gut-reaction to seize control of the Fed is to fire Powell, but neither the stock market nor the US supreme court have responded kindly to such threats. So, Trump, with Pulte’s help, has spent the summer following other tactics.
In July, Trump zeroed in on renovations that were taking place at the Fed’s headquarters in Washington DC, claiming that the renovations were fraudulent because they were more expensive than what was originally budgeted, costing $2.5bn instead of $1.9bn. The Fed put this down to complications that came up during renovations.
But as criticisms of the renovations died down, Trump started zeroing in on Cook. Her exit would allow Trump to appoint a replacement who may be more sympathetic to his desire for lower rates.
In a statement, Cook said that she has “no intention of being bullied to step down from my position because of some questions raised in a tweet”, adding: “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”
On Friday, Trump threatened to fire her if she did not resign.
